Read this whole page to become an expert in this topic in 5-7 minutes, or book a call with our experts instead.

The problem with investing in rentals in today's market

Understanding the challenges facing modern investors.

Tell me the Problems

Real estate investment strategies have changed A LOT in the last few years.

The difference between then & now

Investing in real estate was once a straightforward path to financial freedom and early retirement. Now, however, it can feel more complicated and arduous than it used to be.

Then vs. Now: You buy a rental property.

  • Then:

    Buying a rental or two and repeating the process for a few years was seen as a way for you to become independently wealthy. Local duplexes, fourplexes, and condos were priced to make the initial investment accessible to the individual investor. Local regulatory restrictions on rentals were few are far between.

  • Now:

    Researching just one rental property can take you hours of work to estimate your initial investment, let alone your return. Plus, the pressure of choosing the right type of rental, in the right location, at the right price and fill it with the right tenants... can make any investor question if it’s worth it.

Then vs. Now: You buy a house to flip.

  • Then:

    Buying a lemon house in a good neighborhood gave you a hands-on way to building financial freedom. You could choose to use contractors with less of a return but the truly scrappy could turn DIY into dollars. With some elbow grease and hard work, you could turn a healthy profit in just a few months.

  • Now:

    The rising cost of goods due to inflation and the explosion of popularity has made house-flipping much more expensive to break into as an investment strategy. A newly-listed old home with good bones turns into a nightmare bidding war on day 1. And the cost to flip the home can outcompete home values and leave you with little return on your investment.

Then vs. Now: You invest in a fund or crowdfunding campaign.

  • Then:

    Savvy investors used to be able to add a REIT or real estate fund into their portfolio. With only a few options, picking a fund was simple and returns were steady with less volatility than regular stocks.

  • Now:

    While REITs can still deliver long-term returns compared to stocks, they don't give you, the investor, any of the benefits of OWNING the property. You have little control over your own return compared to being able to set a rent price or selling in an up market
    for profit.

And then in the middle of all this change for investors, a new investment vehicle hit the market and shook everything up again.

Read More

The Drastic Impact of Short-Term Rental Platforms

The rise of vacation rentals

Platforms such as Airbnb and Vrbo have transformed traditional rental properties into highly sought-after vacation rental opportunities.This shift has led to a rapid acquisition of properties by vacation rental tycoons at the expense of the average investor. This has significantly impacted the inventory of affordable investment options for smaller investors and altering the fabric of local communities.

  • Short-term out-competes long term rentals

    Some investors have switched from offering long-term rentals, which are more accessible to locals, to short-term rentals. Long-term investors find themselves competing not only with each other but also with short-term rental investors, intensifying the competition in already tight markets.

  • Homes become income-generating assets

    Home-sharing then continues to boost house prices by allowing homeowners to earn income from their unused housing capacity, enhancing the attractiveness of owning over renting and increasing the price-to-rent ratio. Each property now becomes a single-family home PLUS investment opportunity and the list price reflects that.

  • Legislation crack-down

    In an effort to reclaim local communities and stabilize home prices, HOAs and local government entities have issued rules and requirements that can affect all investors. Blanket rules against short-term rentals and home-sharing can also affect all rental owners too. This further complicates evaluating rental properties for investors.

The current problems for investors

The list of problems related to real estate investing can feel long...

  • Inventory shortages The real estate market is experiencing historically low levels of inventory, which favors sellers and drives up property prices beyond the reach of many traditional investors.

  • Increased mortgage rates The real estate market is experiencing historically low levels of inventory, which favors sellers and drives up property prices beyond the reach of many traditional investors.

  • Surging home prices With median home-sale prices reaching record highs, entering the market has become a daunting challenge for many.

  • Changing commission structures Upcoming changes in real estate commission structures could further complicate the buying and selling process, potentially impacting overall market dynamics.

But

investing in high-quality rentals still leads to high returns for investors and communities.

We know exactly what you want

Own your property from dirt to door. We simply do the hard work for you.

We Handle

  • Identifying and developing the community
  • All zoning, permitting, & planning
  • All construction, subcontractors, inspections, etc.
  • Facilitating all financing options & loan origination
  • Listing and marketing the property for rent
  • Interviewing and finding new, qualified residents
  • Collecting rents and managing all payments
  • All resident communications including repairs & maintenance

You Handle

  • 25%+ Down Payment
  • Collect Your Return

There is a solution.

Own purpose-built rentals by The Peak Group

Show me the Solution

Read about it from the source

Where we got the facts:

What to talk to a real human? No problem.

Talk to one of our investment advisors for free.